2008 (10) TMI 191 - AT - Central Excise

Credit for Duty on Non-Excisable Goods Upheld, Precedent Emphasized

COMMISSIONER OF C. EX., CHENNAI-III Versus NAGAPPA SPRINGS PVT. LTD.

The Revenue's appeal against allowing credit of duty paid on non-excisable goods was dismissed. The case centered on whether duty paid on 'Spring Steel ... Cenvat Credit – Activity held to be non-excisable – assessee paid duty on drawn wires after taking and utilizing credit - The statutory provisions allow an assessee to avail duty paid on inputs when it receives them in its factory. The appeal filed by the revenue has mainly taken the ground that in case the supplier manufacturer of spring steel wire claimed refund of the duty paid, the same would have to be refunded. - Even if the jurisdictional authorities at the supplier manufacturer’s end assessed the duty on the inputs incorrectly, the authorities having jurisdiction over the recipient manufacturer cannot reopen the assessment reflected in the invoices. As long as the respondent manufacturer had taken reasonable steps to know the licit origin, identity and the address of the manufacturer, the assessee can avail the credit as reflected in the invoices accompanying the inputs. – benefit of credit can not be denied and demand is not sustainable. Issues: Revenue's appeal against allowing credit of duty paid on non-excisable goods.In this case, the main issue revolves around the Revenue's appeal against the allowance of credit of duty paid on non-excisable goods. The Revenue contended that the lower authorities erred in permitting the credit of duty paid on 'Spring Steel Wire' to the respondents. The argument was based on the premise that if the manufacturer of the spring steel wire claimed a refund of the duty paid, it should be refunded, rendering the impugned order incorrect.The facts of the case revealed that M/s. Nagappa Springs Pvt. Ltd. had availed credit related to inputs received during a specific period. The Board had clarified that the production of wires from wire rods was not excisable. Despite this, the respondents took credit of duty paid on wires. The Revenue objected to this credit, asserting that duty payments for non-excisable activities were deposits, not excise duty. However, various case laws were cited where manufacturers receiving inputs on payment of duty were deemed eligible for credit. The Tribunal's decision in a similar dispute emphasized that the jurisdictional officers of the supplier unit could not contest the duty already determined.During the hearing, it was acknowledged that the respondents had received wires on payment of duty and used the credit for duty on manufactured springs. The statutory provisions allowed the assessee to avail duty paid on inputs received in its factory, regardless of the correctness of the assessment at the supplier's end. The judgment referenced a Supreme Court decision affirming that the benefit of duty paid by the supplier manufacturer should be availed by the recipient manufacturer. As the Revenue failed to provide valid grounds for a contrary view, the impugned order was upheld, and the Revenue's appeal was dismissed.